Euro zone economy to rebound more strongly in 2021, 2022 - Commission

Jan Strupczewski
·2 min read

By Jan Strupczewski

BRUSSELS, May 12 (Reuters) - The euro zone will rebound from its COVID-19 slump more than expected, the European Commission said on Wednesday, but some countries won't reach pre-crisis levels before the end of 2022 -- an argument for continued suspension of EU borrowing limits.

The aggregate growth of the 19 countries sharing the euro currency should be 4.3% this year and 4.4% in 2022, the European Union's executive arm said, revising upwards its forecast from February of 3.8% growth in both years.

"The EU and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased. This growth will be driven by private consumption, investment, and a rising demand for EU exports from a strengthening global economy," it said.

The forecast brings the Commission closer to the International Monetary Fund, which last month said it expected 4.4% growth in the euro zone this year.

"Growth rates will continue to vary across the EU, but all Member States should see their economies return to pre-crisis levels by the end of 2022," the Commission said.

The need to return to pre-crisis levels has been an argument for the suspension of EU borrowing limits for governments in 2020 and 2021 and the Commission said in March that while its final decision would depend on the May forecasts, the EU should keep the limits suspended in 2022 to help economies rebound.

Government borrowing to keep economics alive during pandemic lockdowns will boost euro zone public debt to 102.4% of GDP this year from 100% in 2020. It will only edge lower to 100.8% in 2022, the Commission forecast.

The aggregate euro zone budget deficit is to balloon to 8% of GDP this year before halving to 3.% in 2022.

"Unprecedented fiscal support has been, and remains, essential in helping Europe's workers and companies to weather the storm," EU Economic Commissioner Paolo Gentiloni said.

Inflation, which the ECB has struggled for years to bring closer to its target of below, but close to 2%, should accelerate to 1.7% in 2021 and slow down to 1.3% in 2021.

The EU's recovery effort financed through joint borrowing will boost public investment, as a proportion of GDP, to its highest level in more than a decade in 2022, the Commission said. (Reporting by Jan Strupczewski)

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • UPDATE 1-Bank of Japan may signal near-term rate hike with new price forecasts

    The Bank of Japan on Friday is set to project inflation will stay near its 2% target in coming years and signal its readiness to raise interest rates from near-zero, in hope of keeping yen bears from pushing the currency to fresh 34-year lows. Recent threats of intervention by Japanese authorities have failed to arrest the yen's slide against the dollar to levels unseen since 1990, adding to headaches for policymakers worried about the hit to consumption from rising living costs.

  • Rex International Holding's (SGX:5WH) investors will be pleased with their respectable 91% return over the last five years

    It hasn't been the best quarter for Rex International Holding Limited ( SGX:5WH ) shareholders, since the share price...

  • Blinken to meet Chinese counterpart Wang Yi in Beijing

    U.S. Secretary of State Antony Blinken is due to meet Chinese Foreign Minister Wang Yi in Beijing on Friday for talks across a range of complex issues, including deepening strains over China's backing of Russia's invasion of Ukraine. Blinken will spend several hours with Wang across different closed-door meetings and a working lunch as the two sides try to maintain progress in ties despite a broad and thorny agenda. U.S. State Department officials signalled ahead of the sessions that China's support for Russia would feature strongly, saying that Washington is prepared to act against Chinese companies that have been helping retool and resupply Russia's defence industry.

  • Local TV Cameras Capture Passerby’s Fight With California Mayor’s Security Detail

    KRON-TVA passerby interrupted a local television interview Tuesday with San Jose Mayor Matt Mahan to start a fight with one of Mahan’s security personnel, leading to an arrest for felony battery on a police officer, among other charges, local media reported.During an interview with KRON, which captured video of the altercation, Mahan was speaking on camera when a man, who police have identified as 35-year-old Wesley Pollard, approached the security detail from behind Mahan and began swearing.Aft

  • Dan Rather Will Return to CBS News for First Time in 18 Years

    The former anchor was fired from the network in 2006 after a controversial '60 Minutes II' report on President George W. Bush

  • Patriots select quarterback Drake Maye with No. 3 pick in NFL draft

    The New England Patriots have selected North Carolina quarterback Drake Maye with the No. 3 pick in Thursday’s NFL draft. Maye becomes the second quarterback taken in the first round by New England since 2021 and will be its latest attempt to find a franchise quarterback following the departure of Tom Brady after the 2019 season. New England traded 2021 first-round pick Mac Jones to Jacksonville earlier this offseason. At 6-foot-4 and 220 pounds, Maye checks many of the boxes the Patriots were l

  • Is Caleb Williams poised for success with the Bears?

    Yahoo Sports’ Draft Live Crew reacts to the Chicago Bears selecting Caleb Williams as the top overall pick, discussing the implications for the former USC quarterback and the future of the franchise.

  • Multiple pride flags vandalized at home of long-time Saranac Lake resident

    Multiple pride flags vandalized at home of long-time Saranac Lake resident

  • USC's move to cancel commencement amid protests draws criticism from students, alumni

    The University of Southern California's decision Thursday to cancel its main graduation ceremony, a move that came 10 days after administrators said the student valedictorian who had expressed support for Palestinians would not be allowed to speak, left students and alumni stunned as protests over the Israel-Hamas war continue to spread on campuses nationwide. “It seems like USC isn’t really listening to their student body,” said Olivia Lee, a 2023 business administration graduate who said she is rethinking whether to recommend the private university to potential students.

  • Commanders select Heisman Trophy-winning LSU QB Jayden Daniels with the 2nd pick in the NFL draft

    ASHBURN, Va. (AP) — The Washington Commanders selected Heisman Trophy-winning quarterback Jayden Daniels with the second pick in the NFL draft on Thursday night. The decision to go with Daniels, the AP's college football player of the year for his stellar season with LSU, was made after Chicago led off by taking Southern California QB Caleb Williams as expected. Washington went with Daniels over North Carolina’s Drake Maye and Michigan national champion J.J. McCarthy. Short of Williams, a Washin

  • Dow Jones Futures: Microsoft, Google Jump; New Market Rally Still Must Do This

    Microsoft and Google jumped on earnings late after the market rally attempt showed resilience Wednesday amid Meta's sell-off.

  • Inquest into B.C. police shooting deaths recommends emergency events be recorded

    BURNABY, B.C. — An inquest jury looking into the police shooting deaths of a man and the woman he was holding hostage has recommended that events involving the emergency response team be recorded with both video and audio. The recommendation is one of seven to come following the inquest into the deaths of Randy Crosson and Nona McEwan in March 2019 in Surrey, B.C. The jury also recommended the Ministry of Public Safety and Solicitor General offer extended training to probation officers in mental

  • Drake Maye goes north, as New England takes former UNC QB at No. 3 in NFL Draft

    Maye, who grew up in the Charlotte area, was picked immediately after two other QBs — Southern Cal’s Caleb Williams and LSU’s Jayden Daniels.

  • Elisabeth Moss reveals she broke her back on set, kept filming her new FX show ‘The Veil'

    Elisabeth Moss revealed an Episode 2 scene of Hulu and FX's "The Veil" is the second time she filmed a stunt due to breaking a bone the first time.

  • New England Patriots pick QB Drake Maye in Round 1 of 2024 NFL draft. What to know

    Maye solidified himself as one of the nation's top passers in 2023. Now he's heading for the NFL. Here's what to know about the UNC passer.

  • South Korea's public finances no longer a credit rating 'strength', Fitch says

    South Korea's public finances are no longer a strength for its sovereign credit rating but are now a neutral factor requiring near-term efforts to contain the rise in debt, global ratings agency Fitch said. Last month, when Fitch affirmed South Korea's credit rating at "AA-" with a stable outlook, it expected the country's sovereign debt ratio to rise to 51.4% of gross domestic product (GDP) in 2024, higher than the median of 48.5% for "AA" rated countries, and to 53.6% by 2028, diverging from a downward trend forecast for the "AA" median.

  • Investing in Hextar Global Berhad (KLSE:HEXTAR) five years ago would have delivered you a 529% gain

    Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock...

  • New Whitehorse shelter operator removed crucial procedures, inquest hears

    The non-profit organization that took over operations at the Whitehorse emergency shelter in 2022 discontinued some procedures at the facility, including an overdose response procedure, a coroner's inquest heard this week.Testimony during this third and final week of the inquest focused on some of the changes made at the facility after Connective, the non-profit, took over operations from the Yukon government. "We do not have clear guidelines ... we have a lot of grey (areas) in the program," Gi

  • Ellen DeGeneres Jokes About Getting 'Kicked Out of Show Business' After Toxic Workplace Claims: I 'Had a Hard Time'

    "It's hard to dance when you're crying," DeGeneres said while admitting how hard it was for her to cope as she became "persona non grata" for the second time in her career

  • Padres vs. Rockies Highlights

    Dakota Hudson and the Rockies defeat Randy Vásquez and the Padres 10-9